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How Far Can Macro-Economic Policies Help Revive India during the Pandemic? A Computable General EquilibriumAnalysis

Author

Listed:
  • Barun Deb Pal

    (International Food Policy Research Institute (IFPRI), New Delhi)

  • Sanjib Pohit

    (National Council of Applied Economic Research)

  • Meenakshi Rajeev

    (Institute for Social and Economic Change (ISEC), Bengaluru, India
    National Council of Applied Economic Research)

Abstract

This study uses a computable general equilibrium model to analyse whether the economic relief package offered by the Indian Government to the affected parties during the COVID-19 pandemic had any lacunae or alternative policies and institutional arrangements could have been devised to minimise the economic losses caused by the pandemic in the country. The results reveal that existing economic relief packages saved a loss of almost 3 per cent in GDP. In contrast, spending 6 per cent of GDP as cash incentive to the producers would have resulted in only a 1 per cent fall in GDP. We argue that the pandemic raises transaction costs for the producer, and thus incentivising them will boost the supply of goods and services in the economy.

Suggested Citation

  • Barun Deb Pal & Sanjib Pohit & Meenakshi Rajeev, 2023. "How Far Can Macro-Economic Policies Help Revive India during the Pandemic? A Computable General EquilibriumAnalysis," NCAER Working Papers 147, National Council of Applied Economic Research.
    • Handle: RePEc:nca:ncaerw:147
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    File URL: https://www.ncaer.org/publication/how-far-can-macro-economic-policies-help-revive-india-during-the-pandemic-a-computable-general-equilibrium-analysis
    File Function: First version, 2023
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    More about this item

    Keywords

    COVID-19 pandemic; CGE model; Transaction cost; Indian economy; Fiscal policy;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • D1 - Microeconomics - - Household Behavior
    • D2 - Microeconomics - - Production and Organizations

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